The Mercedes-Benz Cars division in particular significantly surpassed its prior-year earnings as a result of further growth in unit sales. This was primarily due to the new C-Class in its first full year, as well as the expanded product range in the SUV segment (including the GLA). Daimler Trucks and Mercedes-Benz Vans significantly surpassed their prior-year earnings. Both divisions achieved growth in unit sales mainly in the NAFTA region and Europe. Daimler Buses achieved higher earnings than in 2014. Daimler Financial Services once again significantly surpassed its prior-year earnings, mainly as a result of its increased contract volume.

The development of currency exchange rates and lower expenses due to increased discount rates had a positive impact on operating profit. Also, the increasing effect of the implemented efficiency measures contributed to higher EBIT.

Special items resulted in expenses for the Group in 2015. In particular, expenses of €340 million from a recall in connection with Takata airbags at the Mercedes-Benz Cars and the Mercedes-Benz Vans division, expenses connected with the restructuring of the Group’s own dealer network in a net amount of €144 million across all automotive divisions and public-sector levies related to prior periods of €121 million at the Mercedes-Benz Cars division led to negative effects on earnings.

The reconciliation of segment earnings to Group EBIT resulted in significantly lower income than in the previous year. The previous year was affected in particular by the income from the disposal of the shares in Rolls-Royce Power Systems Holding GmbH (RRPSH) and the remeasurement and sale of the shares in Tesla Motors Inc. (Tesla) as well as the expenses from the related hedging instruments totaling €1,482 million. Expenses connected with the ongoing antitrust investigations of European truck manufacturers by the EU Commission reduced earnings by €600 million in the previous year.

The special items affecting earnings in the years 2014 and 2015 are shown in table B.14.

The Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans divisions significantly increased their EBIT from the ongoing business in 2015 and thus met the forecasts made in Annual Report 2014. Daimler Buses also fulfilled our expectations with EBIT just under the prior-year level. The earnings of Daimler Financial Services developed better than we had forecasted at the beginning of the year. We had anticipated a slight improvement at Daimler Financial Services compared with the previous year. We adjusted those assessments upwards as the year progressed in the context of our quarterly reporting, as the division’s contract volume increased faster than expected.

This very positive development primarily reflects the in-creased unit sales of new vehicles. The main drivers were the new C-Class, the compact cars and increased unit sales in the SUV segment. Other positive effects on EBIT resulted from the better pricing, efficiency measures and currency translation. Negative effects resulted from expenses for the expansion of production capacities and advance expenditure for new technologies and vehicles. EBIT also includes expenses of €300 million from a recall in connection with Takata airbags as well as expenses for public-sector levies from prior periods of €121 million and expenses for the relocation of the Mercedes-Benz USA, LLC headquarters caused expenses of €19 million. On the other hand, EBIT includes a gain of €87 million on the sale of real estate in the United States. EBIT in the previous year included impairments of investments in the field of alternative drive systems of €30 million.

The automotive divisions were also affected by a total expense of €144 million from the restructuring of Daimler’s own dealership network (2014: €116 million). In this context, we refer to the information provided in Note 5 of the Notes to the Consolidated Financial Statements.

The positive development of earnings was primarily the result of increased unit sales in the NAFTA region and Europe, the realization of further efficiency improvements and positive exchange-rate effects. There were negative impacts on earnings from lower unit sales in Latin America and Indonesia, as well as from higher expenses for warranties and customer goodwill, the expansion of production capacities and advance expenditure for new technologies and vehicles. EBIT also includes expenses of €58 million for workforce actions in the context of the ongoing optimization programs in Brazil and Germany. Furthermore, the sale of Atlantis Foundries (Pty.) Ltd. resulted in expenses of €61 million. The prior-year earnings were reduced by expenses from the impairment of the equity-method carrying value of the investment in Kamaz PAO.

Mercedes-Benz Vans posted EBIT of €880 million in 2015, a significant improvement on its prior-year earnings of €682 million. The division’s return on sales increased to 7.7 % from 6.8 % in 2014. (See graphic B.15)

EBIT reflects the very positive development of unit sales, especially in Europe and in the NAFTA region. This was mainly due to the very strong growth rates for the V-Class and the new Vito. Improved material efficiency also had positive impact on earnings, while expenses for warranties and customer goodwill affected EBIT negatively. Additionally, expenses of €40 million from a recall in connection with Takata airbags had a negative effect on earnings. In the previous year, a gain on the reversal of an impairment of the investment in the Chinese joint venture Fujian Benz Automotive Corporation boosted EBIT by €61 million.

Positive effects resulted in particular from the good business with complete buses with a positive product mix in Western Europe as well as further efficiency improvements. The development of earnings also benefited from positive exchange-rate effects. On the other hand, the continuation of the difficult economic situation in Latin America had a negative impact on earnings. The division’s EBIT includes a gain of €16 million on the sale of the shares in MCI Holdings Inc.

The main reasons for this development were the increased contract volume and positive exchange-rate effects, which more than offset additional expenses in connection with the expansion of business operations.

The reconciliation of the divisions’ EBIT to Group EBIT comprises gains and/or losses at the corporate level and the effects on earnings of eliminating intra-group transactions between the divisions.

Items at the corporate level resulted in an expense of €79 million (2014: income of €713 million). The income in the previous year primarily resulted from our investments in RRPSH and Tesla. In 2014, Daimler had a gain of €1,006 million from the sale of the shares in RRPSH and an expense of €118 million from the remeasurement of the put option on those shares. In connection with our investment in Tesla, the loss of significant influence on that company meant that the Tesla shares had to be remeasured, resulting in a gain of €718 million. The hedge of Tesla’s share price and the sale of those shares resulted in total expenses of €124 million in 2014. Items at the corporate level also included expenses of €600 million related to the ongoing antitrust investigations of European manufacturers of commercial vehicles by the EU Commission.

The elimination of intra-group transactions resulted in income of €50 million in 2015 (2014: €42 million).

The reconciliation of Group EBIT to profit before income taxes is shown in table B.17.

B.17 Reconciliation of Group EBIT to profit before income taxes

2015

2014

In millions of euros

Group EBIT

13,186

10,752

Amortization of capitalized borrowing costs1

-10

-9

Interest income

170

145

Interest expense

-602

-715

Profit before income taxes

12,744

10,173

1 Amortization of capitalized borrowing costs is not included in the internal performance measure EBIT, but is a component of cost of sales.